United States Federal Reserve Chair Jerome Powell said on Wednesday that the bank anticipates ongoing rate increases “will be appropriate” to bring inflation down, but that the pace of hikes will continue to depend on the incoming data. “We will make our decisions meeting by meeting, and we will continue to communicate our thinking as clearly as possible. Our overarching focus is using our tools to bring inflation back down to our 2 percent goal and to keep longer-term inflation expectations well anchored,” we cannot fail on this task to bring inflation down to 2%, (NB: its the impossible without a depression it cannot be down because the inflation drivers are not financial in nature. He is wrong again and will overtighten the economy and bring on not only a recession but a full blown depression) Powell told the Senate Banking Committee. He conceded that inflation has “surprised to the upside” and that “further surprises could be in store,” assuring the Fed will be “highly attentive to inflation risks and determined to take the measures necessary to restore price stability” and that the US economy is “very strong and well positioned to handle tighter monetary policy.” NN: He is concentrating on inflation. Stock market and recession be damned. He will over tighten. Look its the biggest FED fuck up ever. Do you think he became smart all of a sudden.
JPMorgan laying off hundreds in mortgage business
June 22 (Reuters) – JPMorgan Chase & Co (JPM.N) is laying off hundreds of employees in its home-lending business and reassigning hundreds more this week, Bloomberg News reported on Wednesday, citing people familiar with the matter. More than 1,000 employees will be affected, the report said, and about half of them will be moved to different divisions with the bank. “Our staffing decision this week was a result of cyclical changes in the mortgage market,” a spokesperson for the bank said. JPMorgan has 273,948 employees worldwide, according to its latest quarterly filing with the U.S. Securities and Exchange Commission. “We were able to proactively move many impacted employees to new roles within the firm and are working to help the remaining affected employees find new employment within Chase and externally,” the spokesperson added. Last week, the Federal Reserve hiked interest rates by three-quarters of a percentage point, the largest increase since 1994, after official data just a few days earlier showed inflation rose despite expectations it had peaked. Real estate brokers Compass Inc (COMP.N) and Redfin Corp (RDFN.O) also said last week they would cut jobs as homebuying demand was slowing due to rising mortgage rates and surging inflation. In May, U.S. existing home sales tumbled to a two-year low as median house prices jumped to a record high – topping the $400,000 mark for the first time. NN: Mortgages will refix at twice the payment this year and double again next year….. Another hosing crash is in the making. You know the drill. Stand back and wait and you will buy the real estate of your dreams at steep discounts. This will be the biggest real estate bust we have ever seen……..
Powell Says Soft Landing ‘Very Challenging,’ Recession Possible…… HA HA HA HA
Federal Reserve Chair Jerome Powell gave his most explicit acknowledgment to date that steep rate hikes could tip the US economy into recession, saying one is possible and calling a soft landing “very challenging.” “The other risk, though, is that we would not manage to restore price stability and that we would allow this high inflation to get entrenched in the economy,” Powell told lawmakers on Wednesday. “We can’t fail on that task. We have to get back to 2% inflation.” The Fed chair was testifying before the Senate Banking Committee during the first of two days of congressional hearings. In his opening remarks, Powell said that officials “anticipate that ongoing rate increases will be appropriate,” to cool the hottest price pressures in 40 years. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook,” he said. Powell’s remarks reinforced comments at a press conference last week after he and his colleagues on the Federal Open Market Committee raised their benchmark lending rate 75 basis points — the biggest increase since 1994 — to a range of 1.5% to 1.75%. While Powell told reporters then that another 75 basis-point increase, or a 50 basis-point move, was on the table for the next meeting in late July, Wednesday’s text made no reference to the size of future rate hikes. Fed Governor Christopher Waller said Saturday that he would support a 75-basis-point rate increase in July should economic data come in as he expects. “We understand the hardship high inflation is causing,” Powell said Wednesday. “We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so.” Investors expect the US central bank to keep raising rates to a peak around 3.6% by the middle of next year, according to interest-rate futures. “Financial conditions have tightened and priced in a string of rate increases and that’s appropriate,” Powell said in response to a question following his opening remarks. “We need to go ahead and have them.”
The Labor Department’s consumer price index rose 8.6% last month from a year earlier, a four-decade high. University of Michigan data showed US households expect inflation of 3.3% over the next five to 10 years, the most since 2008 and up from 3% in May.
Fed officials have admitted that they were too slow to tighten and are now trying to front-load rate increases in the most aggressive policy pivot in decades.
While a recession isn’t in the Fed’s forecast, economists are increasingly flagging the likelihood of a downturn sometime in the next two years.
“The American economy is very strong and well positioned to handle tighter monetary policy,” Powell said in his opening remarks.
While he said that he did not see the likelihood of a recession as particularly elevated right now, he said that it was “certainly a possibility. It is not our intended outcome at all,” noting that events in the last few months have made it harder for the Fed to lower inflation while sustaining a strong labor market.A soft landing “is our goal. It is going to be very challenging. It has been made significantly more challenging by the events of the last few months — thinking there of the war and of commodities prices and further problems with supply chains.” Powell called the labor market “extremely tight.” “The tightening in financial conditions that we have seen in recent months should continue to temper growth and help bring demand into better balance with supply,” he said. Policy makers’ latest forecasts, released last week, show the level of rates roughly doubling in the second half of the year to a target range of 3.25% to 3.5%. They saw rates peaking next year at 3.8%. Officials have also begun shrinking their massive balance sheet. The combined impact of higher borrowing costs and so-called quantitative tightening is expected to come at some cost to jobs.
The US Economy Is Headed for a Crash Landing
A recession is coming within 12 to 18 months as the Fed focuses on curbing inflation.
If you’re still holding out hope that the Federal Reserve will be able to engineer a soft landing in the US economy, abandon it. A recession is inevitable within the next 12 to 18 months. In their latest set of projections, Fed officials laid out a benign scenario, in which the economy keeps growing at a moderate pace and unemployment increases only slightly, even as the central bank raises interest rates significantly to get inflation under control. While the Fed’s forecasts have become more plausible over time, I see several reasons to expect a much harder landing.
First, persistent price increases have forced the Fed to shift its focus from supporting economic activity to pushing inflation back down to its 2% objective. The central bank’s employment mandate is now subservient to its inflation mandate. This can be seen both in Chair Jerome Powell’s performance at last week’s press conference and in the June FOMC statement, which removed language that the labor market would “remain strong.”
Second, the new focus on price stability will be relentless. Fed officials recognize that failing to bring inflation back down would be disastrous: Inflation expectations would likely become unanchored, necessitating an even bigger recession later. From a risk management perspective, better to act now, whatever the cost in terms of jobs and growth. Powell does not want to repeat the mistakes of the late 1960s and the 1970s.
Third, the current economic expansion is uniquely vulnerable to a sudden stop. In the short term, payroll growth, economic reopening and healthy balance sheets (supported by the vast fiscal stimulus of 2020 and 2021) should support demand, which in several sectors exceeds supply. For example, the two-year cumulative supply shortage in the motor vehicle sector likely amounts to several million units. As a result, it’ll take time and a considerable monetary policy tightening to reduce demand and for that to translate fully into weaker production of goods and services.
But when that time comes, the production adjustment is likely to be abrupt, due to tight financial conditions, restrictive fiscal policy and tapped-out household savings. The broad US equity market is down more than 20%, mortgage rates are up more than 2 percentage points and the dollar is up about 10% against a broad basket of foreign currencies (constraining U.S. exports). The Hutchins Center at the Brookings Institution estimates that fiscal policy shaved more than 3 percentage points off annualized US economic growth in the first three months of 2022 — a drag that is expected to persist through 2023. As inflation outstrips wage growth, the personal savings rate has plummeted, from 26.6% in March 2021 to 4.4% this April, significantly below its long-run average. No wonder consumer sentiment has fallen to levels last reached in the aftermath of the 2008 financial crisis, and Google searches for the word “recession” are hitting new records. Finally, economic history points to a hard landing. The Fed has never tightened enough to push up the unemployment rate by 0.5 percentage point or more without triggering a recession. According to the Sahm rule, when this trigger is reached the next stop is a deeper slump, in which unemployment increases by at least 2 percentage points. Much like Wile E. Coyote heading off a cliff, the US economy has plenty of momentum but rapidly disappearing support. Falling back to earth will not be a pleasant experience. NN: I am adamant their will be a severe recession. Do not buy into the soft landing crap. Sure the rate of inflation MAY slow. But reality inflation running even at a 6% rate is a disaster. REALLY! The Fed is in a tightening mode period end of statement. And i have Never Ever seen a stock market rally when the Fed is taking away the punch bowel. Another even bigger stock market crash is right around the corner
UK Inflation Rises to New 40-Year High With More Gains Expected
UK inflation rose to a fresh four-decade high in May after broad increases in the cost of everything from fuel and electricity to food and beverages.
The rate accelerated to 9.1%, from 9% a month earlier, the Office for National Statistics said Wednesday.
Retail prices climbed more than expected to 11.7%, and there were also more signs of inflationary pressures building at the wholesale level, with raw material costs increasing the most on record. The BOE says it is ready to ‘act forcefully’ to combat soaring prices While the jump was smaller than seen in recent months, the figures still underline the scale of the inflation crisis facing the UK. Matters will get worse later this year when another energy price hike kicks in, with the Bank of England forecasting price gains will surge above 11% in October.. “The BOE opened the door to moving in bigger steps than 25 basis points by saying signs of more persistent inflationary pressure would be met by ‘forceful action.’ Today’s release will do nothing to allay those fears. We expect inflation to pick up in the months ahead as rising food and fuel prices lift the annual rate. The peak isn’t likely to arrive until October, when Ofgem, the UK’s energy regulator, raises the price cap on energy bills again.” –Dan Hanson, Bloomberg Economics. The increase was driven by rising prices for food and non-alcoholic beverages, which formed a stark contrast to declines a year ago. Rising electricity and gas and other fuel prices, motor fuels and second-hand cars were also big contributors to the headline figure. Energy, food, motor fuel & clothing account for half of the jump in prices
The cost of goods leaving factories rose 15.7% from a year ago, a full percentage point stronger than expected and the most since 1977.
Raw materials prices jumped 22.1%, also more than expected and the most since records started in 1985.
The runaway inflation rate is setting the backdrop for a tumultuous summer for the central bank and Prime Minister Boris Johnson’s government. About 60% of adults report spending less on non-essential items in response to rising costs. “I know that people are worried about the rising cost of living, which is why we have taken targeted action to help families,” said Chancellor of the Exchequer Rishi Sunak. “We are using all the tools at our disposal to bring inflation down and combat rising prices.” Sunak said that “fiscal policy which doesn’t add to inflationary pressures” will be part of the solution, a signal that the government will keep a tight rein on pay settlements with public-sector workers.
The economy is on course to shrink for the first time since the pandemic, consumers are seeing their incomes squeezed at the sharpest pace in two decades, and a series of rail strikes are bringing the nation to a standstill this week.
While Johnson has introduced a package of measures to help offset some of the jump in energy bills, it says increasing pay to match inflation is not an option. Johnson told his cabinet Tuesday that his government seeks to enforce pay restraint on public sector workers or else push prices even higher. Meanwhile the BOE, which says it can do nothing to stop the spike in prices this year, is adding to the short-term pain of some households by hiking rates at an unprecedented pace. More than a fifth of inflation basket is seeing gains of more than 10% Policy makers have already announced five straight hikes, and markets are betting rates will more than double to hit 3% by the end of the year. Chief Economist Huw Pill said policy makers would sacrifice growth in order to bring down inflation in the UK, saying there’s a risk of prices developing a “self-sustaining momentum.” “No signs yet of inflation receding” says Yael Selfin, chief economist at KPMG UK. “Inflation continues to rise, primarily driven by external factors, with price rises spread widely across the economy.” NN: The world has been set on fire by inflation. Central banks the world are coordinating their interest rate rises. Do not let anyone shit you. The same central banker ass holes that kept free money to long and told you inflation is transitory have a new con. That is their will be no recession or at worst a mild one. Fuck Them! Their is a rescission/depression headed for us. Bond funds, retirement funds and real estate are wiping out. And this is the start not the finish.
Lagarde: ECB monitoring risks of recession
European Central Bank President Christine Lagarde said that the central bank is monitoring the risks of a recession, particularly the effects of oil supply shortages and excess on the eurozone’s economy. However, the ECB’s president highlighted that “a recession is not a baseline scenario for the euro area,” as European institutions are projected to see growth in the upcoming period, warning that the inflation is expected to exceed previous estimates for the fiscal year. Lagarde stressed the central bank does not intend to “tighten” its monetary policy, but to rather normalize it through gradual interest rate hikes and a cessation of net asset purchases. NN: Their is no “normalization” the world will be plunged into a deep dark depression over the next 2 years. It will not be a straight down plunge. As the markets ratchet back and forth confusion will abound. The monster has been unchained from the pits of hell. It will be our roughest time together yet. I believe we will prevail but the going will be rough and our success is far from guaranteed. I believe we will be tested to our limits. And i believe we will be victorious.
Italy May Declare State Of Alert If Russian Gas Cuts Persist
Italy may soon declare a state of alert if natural gas supplies from Russia continue to be limited gas supplies. Before the Russian invasion of Ukraine, Italy sourced around 40% of the gas it uses from Russia. Italy has sought to diversify its gas imports with more supply from North African producers, but it still is a major consumer of Russian gas. The state of alert is the second step in Italy’s gas emergency protocols. The country has been in a state of pre-alert since February, when Russia invaded Ukraine, while the third stage of the protocol is a state of emergency. If reductions persist in the coming days, the Italian Ministry of Ecological Transition could decide next week that Italy move from the current state of pre-alert to a state of alert, sources in the ministry told Italian news agency ANSA on Friday. A state of alert would include rationing gas supply to some industrial users, increased gas imports from other suppliers, and increased production at coal-fired power plants, among others. Throughout this week, Italy has been receiving decreased volumes of gas from Russia, with cuts deepening every day since Tuesday. Earlier this week, Russian supply to Italy was cut by 15%. The cut deepened to 35% of requested volumes for Thursday, and on Friday, Italy’s energy major Eni flagged additional cuts to deliveries. Eni will receive just half of the volumes requested for the day, it said. Commenting on the lower supply from Russia, Italy’s Prime Minister Mario Draghi said on Thursday that the Russian “technical reasons” for reduced deliveries were “lies.” “Germany, we, and others believe that these explanations are lies and that gas is being used as a political tool, just like grain is,” Draghi said. The Russian cuts to supply to Italy, as well as to Germany, coincided with the visit in Kyiv of the leaders of Germany, Italy, and France, who met with Ukraine’s President Volodymyr Zelensky to show support to Ukraine.
The Russian cuts to supply to Italy, as well as to Germany, coincided with the visit in Kyiv of the leaders of Germany, Italy, and France, who met with Ukraine’s President Volodymyr Zelensky to show support to Ukraine. NN: In the past 50 years the world has sold out every country run by or invaded by oppressive dictators or states. Ukraine will be no different. The world will not suffer for long energy inflation and food shortages to save Ukraine. Its NOT going to happen. The screams of the masses energy pain and food inflation are resonating in the ears of every sold out public figure . Politicians are NOT elected by Ukraine “freedom” fighters. But by the teaming middle class who cannot find the Ukraine on a map. And they care about the cost of their hamburger and gasoline more then the Ukraine’s.
Europe may shift back to coal as Russia turns down gas flows
UK government does not expect recession….. Yellen says recession is not inevitable……. Biden says a recession is ‘not inevitable’
Chief Secretary to the United Kingdom Treasury Simon Clarke (pictured) told the Times Radio on Monday that the government does not expect a recession. Clarke stressed that the British economy has “considerable underlying strengths” despite “very significant challenges” globally. Earlier, he told Sky News that the pay in the public sector will not be increased over inflation levels as the inflation issue could “either intensify or prolong itself.”
Yellen says recession is not inevitable
REHOBOTH BEACH, Del. — Treasury Secretary Janet Yellen said Sunday that she expects the U.S. economy to slow in the months ahead, but that a recession is not inevitable. Yellen offered a dose of optimism even as economists grow increasingly worried about a recession fueled by skyrocketing inflation and the Russian invasion of Ukraine. Yellen said overall consumer spending in the United States remains strong, while noting that spending patterns are changing, given the impact of rising food and energy prices. Yellen said household savings during the coronavirus pandemic will help sustain spending. The national saving rate has fallen to about 6%, below pre-pandemic levels, after reaching 16.6% in 2020, the highest on record dating to 1948, and 12.7% in 2021.
“I expect the economy to slow,” Yellen said. “It’s been growing at a very rapid rate and the economy has recovered and we have achieved full employment. We expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”
The Federal Reserve on Wednesday approved its largest interest rate increase in more than a quarter-century to stem a surge in inflation. The move raised the target federal funds rate by three-quarters of a percentage point to a range of between 1.5% and 1.75% The tightening of monetary policy was accompanied by a downgrade to the Fed’s economic outlook, with the economy now seen slowing to a below-trend 1.7% rate of growth this year, unemployment rising to 3.7% by the end of this year and continuing to rise to 4.1% through 2024. Yellen said it will take “skill and luck” to bring down inflation while maintaining low unemployment. “I believe it’s possible,” she said.
Biden says a recession is ‘not inevitable’
WASHINGTON (AP) — President Joe Biden said Thursday the American people are “really, really down” after a tumultuous two years with the coronavirus pandemic, volatility in the economy and now surging gasoline prices that are slamming family budgets. But he stressed that a recession was “not inevitable” and held out hope of giving the country a greater sense of confidence. Speaking to The Associated Press in a 30-minute Oval Office interview, the president emphasized the battered economy that he inherited and the lingering psychological scars caused by a pandemic that disrupted people’s sense of identity. He bristled at claims by Republican lawmakers that last year’s COVID-19 aid plan was fully to blame for inflation reaching a 40-year high, calling that argument “bizarre.” As for the overall American mindset, Biden said, “People are really, really down.” “Their need for mental health in America has skyrocketed because people have seen everything upset,” Biden said. “Everything they’ve counted on upset. But most of it’s the consequence of what happened, what happened as a consequence of the, the COVID crisis.” That pessimism has carried over into the economy as record prices at the pump and persistent inflation have jeopardized Democrats’ ability to hold on to the House and Senate in the midterm elections.
Biden addressed the warnings by economists that fighting inflation could tip United States into recession. “First of all, it’s not inevitable,” he said. “Secondly, we’re in a stronger position than any nation in the world to overcome this inflation.”
As for the causes of inflation, Biden flashed some defensiveness on that count. “If it’s my fault, why is it the case in every other major industrial country in the world that inflation is higher? You ask yourself that? I’m not being a wise guy,” he said. The president’s statement appeared to be about inflation rising worldwide, not necessarily whether countries had higher rates than the U.S. Annual inflation in Japan, for example, has risen in recent months though it’s still at a yearly rate of 2.4%, according to the Organization for Economic Co-operation and Development. Asked why he ordered the financial penalties against Moscow that have disrupted food and energy markets globally, Biden said he made his calculation as commander in chief rather than as a politician thinking about elections. “I’m the president of the United States,” he said. “It’s not about my political survival. It’s about what’s best for the country. No kidding. No kidding. So what happens? What happens if the strongest power, NATO, the organizational structure we put together, walked away from Russian aggression?” Biden spun out the possibility of chaos in Europe if an unimpeded Russia kept moving deeper into the continent, China was emboldened to take over Taiwan and North Korea grew even more aggressive with its nuclear weapon ambitions. NN: the truth is the US is already in a recession just ask the big box store guys. Their consumer shit is NOT selling. My belief the 4th of July weekend will be the last hurrah. People will be shocked at the prices they will have to pay. After the last supper (BBQ) they will hunker down. Their savings is gone and consumer debt is exploding. You damn straight their is going to be a big bag recession. And with the out to lunch clueless leadership that is in power worldwide its damn near hopeless. They will continue to fuck things up royally. Can you believe the head of the FED Reserve with all the resources and tools they have had missed the greatest inflation in 40 years. What good as these Doctoral laureates? And to add insult to injury Chairman Powell got to keep his job……..
BOE Raises Rates to Highest Since 2009 and Warns of Bigger Moves
The Bank of England raised interest rates for a fifth straight meeting and sent its strongest signal yet that it’s prepared to unleash larger moves if needed to tame inflation. The nine-member Monetary Policy Committee voted 6-3 to increase the benchmark lending rate by 25 basis points to 1.25%. A minority of officials maintained their push for a move of double that size. Policy makers led by Governor Andrew Bailey hinted that they may join a growing global trend for larger hikes if inflation continues to soar, saying “it would be particularly alert to indications of more persistent inflationary pressures, and would if necessary act forcefully in response.” Crucially, that language was endorsed by all the BOE’s voters, a departure from May when two declined to sign up to guidance that more hikes were needed. The bank also raised its forecast for the peak of inflation this year to “slightly above” 11%, reflecting the planned increase in the energy price cap in October, and said it now expects the economy to contract in the current quarter. Investors raised their bets for further rate increases this year, pricing in a 3% base rate by the end of the year. That would likely require three half-point rate increases and a further quarter-point one at the remaining four meetings this year, an unprecidented pace of tightening. For now though the BOE, which was first major central bank to hike rates after the pandemic, is moving slower than some of its peers. The U.S. Federal Reserve raised interest rates by 75 basis points on Wednesday, the biggest increase since 1994. The Swiss National Bank also surprisingly hiked rates by 50 basis points earlier Thursday. The BOE “continues to balance the inflationary effects on the economy, with the very real chance that they tighten too much and the UK economy lurches into a full blown recession,” said Alan Custis, managing director at Lazard Asset Management. But while the BOE is grappling with an inflation rate that has already hit a four-decade high of 9%, officials are also concerned about an economic slowdown that is putting the UK at risk of recession. NN: Soon to little to late interest rate increases will turn into to much too soon interest rate increases. Reality is the runaway inflation will soon turn into stagflation and then a full blown depression,